Home Africa and the Middle EastAfrica and the Middle East II 2003 Lesotho Telecoms Sector finds its way

Lesotho Telecoms Sector finds its way

by david.nunes
Percy M. Mangoaela Issue: Africa and the Middle East II 2003
Article no.: 8
Topic: Lesotho Telecoms Sector finds its way
Author: Percy M. Mangoaela
Title: Chairman
Organisation: Lesotho Telecommunications Authority
PDF size: 116KB

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Article abstract

Lesotho’s telecommunications sector is typical of least developed countries. With Swedish assistance, significant progress was made in the telecom sector, but after Swedish aid was withdrawn the network declined. A privatization policy was adopted to attract investment in fixed services and Internet growth and to foster the development of competition. Mobile telephony now offers significant competition. A universal access strategy aims to bring telecommunications to the entire population. Cell phone penetration is impressive but Internet connectivity is still quite low.

Full Article

“Lesotho is the only least-developed country (LDC) among the five countries of the Southern African Customs Union (Botswana, Lesotho, Namibia, South Africa, and Swaziland). It’s telecommunications infrastructure and services exhibit the usual characteristics of LDCs, namely: underdeveloped infrastructure, low teledensity, lack of broadband Internet connectivity, and high telephony and data charges. Nowhere else to go but up! A few years after independence a British government-sponsored report claimed that the prospects for the growth of telecommunications in Lesotho were bleak. The International Telecommunication Union (ITU) refused to accept this judgment and approached the Swedes for a second opinion. The latter came to the opposite conclusion and proposed a programme of capital and technical assistance. Thus began a long and fruitful relationship between Lesotho and Sweden in telecommunications during which substantial improvements in the equipment and service were made. During the seventies, the Lesotho Telecommunications Department continued to develop under Swedish management while indigenous managerial capability was also being strengthened. By 1980, when the entity became a corporation, the Lesotho Telecommunications Corporation (LTC), many Lesotho nationals were in senior management positions and the organization was considered one of the best in Southern Africa. Driving in reverse gear Sadly, after Sweden terminated its assistance, the structural weaknesses of the organizations began to emerge. By 1998 the network, its performance and service delivery were in a sorry state: the network was highly congested, running virtually at full capacity, and prone to faults. Customers frequently had to make three or four call attempts to connect during busy periods, resulting in much lost traffic and revenue. Lesotho’s teledensity was l.0 percent in 1991. Due to delays in new construction, the growth in population, lack of maintenance and destruction of lines during two years of labour-management difficulties, teledensity dropped to 0.93 percent by year-end 1997 and remained so until 2000. The waiting list grew from 4,300 in 1991 to 9,300, about 57% of connections, at the start of 1996. In 2000, LTC offered few services to its customers. It lacked card phones, paging, voicemail, and free phone (800) service, although it did offer VSAT. In 1998, LTC had about 400 employees for its 20,400 lines, or 54 lines per employee. Growth is re-established In the light of this deterioration in LTC’s services, the government began to completely restructure the telecommunications sector to enhance its performance. In 1999, they adopted a new telecommunications policy calling for the privatisation of LTC, and the separation of policy, regulatory and operational activities. In 2000, the Lesotho Telecommunications Authority Act, establishing the Authority (LTA), was passed by parliament and LTC was privatised to encourage private sector investment and participation. LTA’s main objectives were to: promote competition, advance universal service/universal access, and protect consumer interests. In 2001, four months after LTC was privatised, there were 22,229 connected subscribers in the country compared to 20,400 in December 1997, but the network had reached its full capacity. In nine out of ten districts, the wait-list exceeded the number of connected subscribers. Accordingly, the LTA included network expansion targets in the licence for the newly privatised incumbent operator, Telecom Lesotho (TL). TL was required to expand switching capacity and install 450 public telephones. Although it met the capacity expansion target, the fixed line targets suffered due to competition from mobile services. Privatisation has clearly been beneficial: · There are 35,922 subscribers: 25,971 residential and 8,800 business compared to 21,300 subscribers before privatisation (8,000 residential and 5,400 business.) < · There are 15,112 would-be subscribers on the waiting list today and strenuous efforts are being made to accelerate the connection rate. · At privatisation, 75% of subscribers were located in the capital, Maseru. Now, only 66% of all connections are in the capital. · In February 2001, when Telecom Lesotho was privatised, 75% of capacity was digitalized. Today 100% of capacity is connected to digital exchanges. · Prior to privatisation, there were 280 public phones. Today there are 709 card phones and 1053 tele-bureau services. Tele-bureaus, providing resale of voice telephony and value added services, were a direct result of telecommunications liberalisation. · Average fault occurrence, today, is 65.66 per 100 lines, below the LTA target of 66. · Card phones, voice mail and toll free numbers are now available. · Three years before privatisation there were 92 leased circuit subscribers. Since privatisation, that number has risen to 194. · In March 2001, only 25% of digital exchanges were outside the capital, and rural penetration was estimated at about 0.3%. Today all exchanges are digital and rural penetration is now 0.7%. Wireless is king Two mobile operators have been licensed to provide mobile telephony services. The first cellular system in Lesotho, a GSM network, was a joint venture between Vodacom of South Africa and the government of Lesotho. It was called Vodacom Lesotho (VCL). When the second mobile operator, a subsidiary of Telecom Lesotho which is 30% government owned, was licensed, the government withdrew from VCL. LTA’s estimates that in early 2003 there were 99,000 mobile subscribers compared to 36,000 fixed lines. VCL now has 75,000 mobile subscribers, up from 6,600 subscribers in the year 2000. In October 2001, LTA issued a second mobile licence to Econet Ezi-Cel Lesotho (EEL), a subsidiary of TL. EEL now has 24,000 subscribers and its entry into the market has considerably changed the landscape. VCL, previously concentrated in the capital, has expanded its coverage throughout the country since the arrival of Ezi-Cel. Ezi-Cel’s arrival prodded VCL to provide pre-paid service; previously, it offered only post-paid. Neither of the two mobile operators have network coverage obligations. Nevertheless, the growth of mobile telephony has been breathtaking. Moving with the times In addition to liberalising the telecommunications market, the government was also concerned by Lesotho’s backwardness in Internet connectivity. Thus, in 2000 it signed a Memorandum of Understanding (MOU) with the United States as part of the Leland Initiative involving 21 African countries. The MOU established an Internet gateway for three years in order to improve range, cost, and quality of Lesotho’s Internet services. Policies guaranteeing the unrestricted flow of information were adopted as part of the agreement. The Leland Initiative terminated in March 2003. The focus of the Lesotho initiative was to: · Establish a local wholesale Internet hub at Telecom Lesotho and promote its use by local ISPs; · Promote awareness of the benefits accruing of using the Internet; · Encourage Lesotho’s government to use the Internet as an engine of national growth; · Act as a catalyst for using the Internet as a key teaching and learning resource in schools; · Develop an ICT unit, within the Ministry of Communications, to champion and coordinate ICT initiatives within the country and government of Lesotho. The government of Lesotho is committed to the development of ICT and recognizes its important role as a critical enabler in the overall development process of the country. The draft National Vision states that “By 2020, Lesotho shall be a stable democracy, united, prosperous and at peace with itself and its neighbours. It shall have a healthy and well-developed human resource base. Its economy will be strong, its environment well-managed and its technology well established.” Accordingly, the government of Lesotho requested the United Nations Development Programme (UNDP) to help it prepare a national policy and strategy for ICT development. The UNDP-funded project aims to accelerate the strategic use of ICT for socio-economic development in Lesotho, and to attract national and international investment for infrastructure, enterprise, services, and capacity development. The project consists of a number of activities that facilitate the use of ICT-for-Development in Lesotho. The principal activities are: · Reviewing the legislative frameworks, contents, policies and institutional arrangements governing national e-readiness; · Ensuring the development of a national ICT policy within the context of the ongoing Poverty Reduction Strategy Paper (PRSP) process effectively linking ICT to national priorities for poverty reduction; · Supporting the establishment of a strong ICT Unit within the Ministry of Communications to monitor implementation of the national ICT policy. The project will also use the development of national ICT policy in the fight against the HIV/AIDS pandemic- a key development challenge in Lesotho. Using ICT as a tool to fight HIV/AIDS will be a priority. Telecommunications for all The government of Lesotho wishes to extend the benefits of telecommunications to the entire population, especially to the rural areas where most of its people live. Initial liberalisation, with poorly defined goals resulted in a network concentrated primarily in and around the nation’s capital. At month end April 2003, telephone penetration (fixed and mobile) was approximately 7.24 percent. Fixed teledensity was at 1.63% with 66% of all fixed line subscribers located in the district of Maseru. There were 99,000 mobile subscribers, 5 people in a hundred by March 2003, primarily concentrated in the district of Maseru and surrounding areas. The Lesotho Telecommunications Authority Act of 2000 requires the LTA to “take all reasonable steps to promote network development, universal service, and access to telecommunications services.” A universal access strategy has been adopted to meet these legal requirements. LTA has developed a fast track strategy to drive the telecoms sector of Lesotho into the 21st century. Without an aggressive strategy, LTA believes that Lesotho will remain far behind the developed countries. The strategy seeks to: · Speed access to telecommunications and information services for all citizens; · Promote access to the Internet throughout the country; · Define a basket of universally available services; · Give everyone in the country reasonable access to public pay phones; · Ensure affordable, universal quality of telecommunications services; and · Attract investment to help operators expand and upgrade their networks and to build a robust Internet network.” Conclusion Fixed line teledensity in Lesotho is quite low even when compared to its neighbours, although cell phone usage, as a proportion of total telephony, is higher. A possible reason for this is that the popularity of cellular phones has been at the expense of fixed line telephony. Internet connection in Lesotho is still very low, basically due to high costs and low awareness of the Internet’s benefits. Telecommunications coverage in the rural areas is another challenge for the LTA. Fixed and mobile penetration in the mountain areas is presently very low. The LTA has a strategy for universal access aimed at finding a commercially viable solution that does not involve government subsidies and the regulator is working with operators to determine appropriate rural penetration targets. The Universal Service Fund, envisaged in the Lesotho Telecommunications Act, has been postponed until 2006, when the fixed operator’s exclusivity ends. The Short-Term Action Plan of the New Partnership for Africa’s Development, NEPAD, has identified four bottlenecks that constrain ICT development in Africa: · Access to capital, · Policies, · Human resources capacity, · Reforms and regulatory framework. Lesotho has tackled these bottlenecks, but with varying degrees of success. Adequately training human resources will be a long-term battle. The liberalization of the telecommunications market has generated additional investments in both fixed and mobile telephony. By far the most striking achievements have been in formulating new policies for the sector, instituting reforms and creating appropriate regulatory machinery. As a whole, the Lesotho telecommunications market now has much greater competition than before and this is an encouraging development.

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